How political prediction markets save lives

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Over the years there has been a lot of talk in this community about how prediction markets could be &#8220-socially valuable&#8221-. The discussion has often focused on the value of the information and/or predictions that the markets could generate, especially in a political context. Election-based decision markets a la Hanson are thus being held as the highest form of &#8220-socially valuable&#8221- prediction markets, and our best bullet aimed at a possible legalization of real-money markets.

However, just in time for Super Tuesday, I&#8217-ve finally stumbled onto a totally different, and to my mind much more compelling societal benefit of political prediction markets (the real-money kind, like Intrade or Bet2Give). It&#8217-s based on sound science, but has nothing to do with information, prediction accuracy, or the usual economics/decision-support suspects:

Participating in political prediction markets may be good for your health by virtue of reducing the killer stress caused by aggravating political outcomes over which you have very little control as a voter. In essence, you can hedge against despair, and thus reduce your political &#8220-learned helplessness&#8221-. I present this idea more completely, and the science behind it, in NewsFutures&#8217- blog.

The interesting thing is that it should be relatively easy to test, say as a senior psychology research project, but the consequences of a positive result would be huge. Who could argue against the legalization of something that saves lives?

So let the word go forth on this day that if there&#8217-s someone out there who would like to run such an experiment, the industry would gladly help out, either through the PMIA, or through individual stake holders like NewsFutures. And if you&#8217-re in an economics department, please reach out across the social sciences aisle to your psychology colleagues and spread the word! This, by the way, is especially aimed at Justin Wolfers who happens to share the U. Penn campus with Martin Seligman, the founder of Positive Psychology himself, and the inventor of &#8220-learned helplessness&#8221-.

2 thoughts on “How political prediction markets save lives

  1. Michael Giberson said:

    Interesting angle. Tim Harford was on the Colbert Report the other day — Harford has a new book out — explaining why a person planning to vote the next day and also buy a new stereo would rationally read up on the stereo before shopping and just vote based on gut feelings.


    You are suggesting that at least a part of the stress over elections and political outcomes can be carved off and made into more of a shopping event, rather than simple voting.


    The person’s vote will be no more likely to affect the outcome of the election, but their prediction market trading will be completely under their control.


    You might be right, though I’d stress the possible stress benefits over ’saving lives.’ My guess is that the effect on mortality rates would be vanishingly small.

  2. Chris. F. Masse said:

    Yes, I agree with Mike that it is an interesting angle. (Remember that EJSS studied psychology as part of his PhD, if my memory is correct.)

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